There is at least one group of economists who don't think the economic sky is about to fall.
The developers of a monthly index that measures economic activity by tracking truck drivers' fuel purchases said Wednesday the index rose in July, indicating that a "slow but steady" economic recovery is under way. The latest release of the Ceridian-UCLA Pulse of Commerce Index (PCI) showed that diesel purchases by the nation's over-the-road truck drivers climbed 1.7 percent in July, after falling 1.9 percent in June.
The PCI, published by the University of California, Los Angeles Anderson School of Management, analyzes data from fuel credit cards swiped by drivers as they fill their rigs. The database is built by capturing and analyzing the location and volume of fuel being purchased.
UCLA and Ceridian said because the consumption data is tracked in real time, the index paints an accurate picture of product movement across the United States and thus, provides a clear window on overall economic performance.
"The key takeaway ... is that the economy continues to recover—which is encouraging—but the pace needs to substantially pick up to put people back to work," said Ed Leamer, chief PCI economist, in a statement. Leamer said that while it's "hard to be very optimistic" about current economic growth prospects, the PCI data do not suggest the nation will fall into the much-discussed "double-dip" recession. Leamer said the weak June showing was due to a late Memorial Day holiday and a resulting slowdown in activity that carried over into the first half of the month.
On Wednesday, financial markets and economists were rattled by news of a decline in U.S. worker productivity, a cooling in China's economic growth, and an increase in the nation's trade deficit caused largely by a fall-off in U.S. exports. The markets also took the Federal Reserve's decision to use proceeds in its huge mortgage securities fund to buy U.S. Treasuries as a sign that a nervous Fed was acting to keep interest rates low to encourage investment in higher-risk assets like stocks and non-Treasury bonds.
Craig Manson, senior vice president for Ceridian and an expert on the PCI, said he remains confident of a steady recovery despite concern over the Fed's actions and the government data. "If August and September are as good as the last half of June and the month of July, we expect [Gross Domestic Product] growth for the third quarter to approach 4 percent," he said.
While acknowledging there are no guarantees, Manson said the "trend is solid."
Manson added that because the PCI is based on actual transactions being conducted in real time, UCLA and Ceridian feel confident in its reliability. He noted that the June PCI index had forecast second-quarter GDP growth of 2.5 percent. The actual number reported by the government was 2.4 percent.